Wolter Kluwer which owns CCH reports:
HMRC has raised £415.3million through investigations into business self-assessment forms over the past year, a 35% increase on last year when it netted £308million in additional tax, interest and penalties…[Neil Tipping, Senior Consultant] “And, whilst it may seem alarming to businesses who are about to submit their returns at the end of this month, the extra figures are in fact as a result of better targeting by the Revenue.
“In the past HMRC have been know to take a general broad brush approach to investigations, but over the past 12 months improvements to their risk profiling system has enabled them to target tax avoidance and evasion more effectively.”
Meanwhile in the US, Russ Fox reports that IRS audits have risen significantly. According to the IRS’s official results:
Overall, enforcement revenue reached $59.2 billion, up from $48.7 billion in 2006 and nearly $34.1 billion in 2002.
That’s about 98 times as much as HMRC for a population six times the size of the UK. Given that Russ has a very healthy blog on tax fraud, I’m not surprised.
Note that Neil Tipping talks about profiling. In my view this is a very good reason to use on-demand services that can aggregate results and provide the basis for benchmarking and analysis. If your firm specialises in any kind of trade and has reasonable numbers of clients in that niche then it is possible to develop statistical analyses that can be used to help clients better understand the risks they face. Those same stats can also be used to help argue cases where HMRC claims ‘local averages.’ They will always have access to a deeper pool of figures than the professional but local knowledge of the kind only professionals can acquire makes a huge difference.
As an aside, I was surprised with Richard Murphy’s assertion that:
The fact that the tax recovered from small business is such a small part of total recoveries is also worrying…The self employed have a much lower compliance rate. The failure to increase recovery from the small business sector as much as is happening in general is of concern in itself.
I’d like to see the stats on this and Richard does say he will write more later.
The last time this was aired on my site (a long time ago) I asserted that average collections from small business were of the order of £2,000. At the time, Simon Sweetman refuted that saying it was more around £500. HMRC has said on many occasions it is endeavouring to get best use of resources. £500 can hardly be worth the collection costs.
Technorati Tags: tax avoidance, tax evasion, tax research
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